Kevin Jenkins, UK & Ireland Managing Director at Visa, commented, “Following a bumper Christmas season, there were signs that consumers were starting to rein in their spending at the start of the New Year. Annual growth slowed down from 2.5% in December to a five-month low of 0.4% in January, as households monitored rising prices on everyday items and how this would impact disposable incomes.

“Brits continued the trend of spending on experiences rather than goods, with a near 6% spending boost in the Hotels, Restaurants and Bars sector and a 3.1% lift in recreation and culture spend.

'Valentine's Day and the half-term break gave consumers more reasons to dine out and treat their loved ones to short getaways around the UK. At the same time, the level of growth in the leisure and hospitality sectors was softer than we have seen in the past year, showing signs that consumers are becoming more cautious with their discretionary spending.'

Visa is tracking the sentiment of several small businesses across the UK on a monthly basis, asking about their views on the economy, business conditions and forecasts for the month ahead.

Josh Beer, The Illustrious Pub Company, CambridgeshireAs expected, January was a quieter month for us with turnover down 5% compared to last year. While our catering orders remained steady, customers who came to dine and drink at our pubs were spending more cautiously. The cold weather and icy driving conditions might have kept quite a few of our regulars at home too, and our figures support this, as our locations with easier pedestrian access were the best performers.

Quan Nguyen, Chi Cafe, LondonJanuary was a rather quiet month for us, with sales slowing down from December. We had fewer customers through the door, and on average people seemed to spend less too. We thought this might be due to people cutting back on spending following an indulgent December, but there might be other factors at play. At the same time, we began to feel the squeeze as our main suppliers had all increased their prices.

Imogen Hawthorne, Paisley Immy Cakes, BirminghamWe’ve had a steady stream of business through in February, and March is already set to be a busy month as we’ve had a number of orders in, and the challenge will be fulfilling them all. We have noticed however that the prices of our ingredients are already rising. For now, we’re keeping a close eye on prices, but if things continue at this pace we may need to shop around for different suppliers.

Visa’s UK Consumer Spending Index uses card transaction data to provide a robust indicator of total consumer expenditure across all payment methods and is used by a range of stakeholders to gain insights into consumer spending, including HM Treasury.